Equities
Canada’s main stock index fell at Thursday’s opening bell with energy and financial stocks again under pressure. On Wall Street, key indexes started weaker with turmoil in the regional banking sector and a rate hike by the European Central Bank hitting already fragile sentiment.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 166.48 points, or 0.86 per cent, at 19,212.36.
The Dow Jones Industrial Average fell 46.92 points, or 0.15%, at the open to 31,827.65.
In the U.S., the S&P 500 opened lower by 13.00 points, or 0.33 per cent, at 3,878.93, while the Nasdaq Composite dropped 49.18 points, or 0.43 per cent, to 11,384.87 at the opening bell.
“Amid recent stresses in the U.S. banking system, a consensus is building that the Fed will not raise rates at its March meeting, given concerns that doing so could undermine aggressive efforts by policymakers to shore up the financial system,” Stephen Innes, managing partner with SPI Asset Management, said.
“Indeed, since the 450-basis-point increase in the fund’s rate over the past year was a huge factor behind the banking system stresses, it seems reasonable to pause rate hikes while the Fed observes if the recent policy measures to stabilize the banking system produce the intended result.”
The Fed makes its policy decision next Wednesday. Early Thursday, the European Central Bank hiked rates by half a percentage point, despite speculation it may pullback amid the current market turmoil. The central bank sited high inflation for its decision to increase by 50 basis points but also said its ready to act to ensure stability, if necessary.
Markets drew some support early Thursday from news that Credit Suisse will borrow up to 50 billion Swiss francs ($74-billion) from the Swiss central bank under emergency credit lines, following a sharp drop in the lender’s share price Wednesday. Shares opened up about 40 per cent in European trading and were more than 20-per-cent higher by midday.
In the U.S., regional banking concerns continued, with First Republic shares down 28 per cent just after the opening bell amid reports that the bank was looking at options, including a possible sale.
In Canada, investors got results from Sobeys parent Empire Co. Ltd. ahead of the market open.
Empire reported net earnings of $125.7-million or 49 cents a share in its latest quarter as its Sobeys supermarket chain rebounded from a November cyberattack. Net profit in the same quarter a year earlier totalled $203.4-million or 77 cents a share.
Empire’s adjusted net earnings totalled $164.8-million, down from $203.4-million a year earlier.
Last week, Empire CEO Michael Medline appeared along with other grocery executives to face questions at a parliamentary committee studying food price inflation at the grocery store. Mr. Medline told the committee that Empire is operating on “paper thin profit margins” of 2.5 per cent. “We at Empire are not profiting from inflation. It doesn’t matter how many times you say it, write it or tweet it. It is simply not true,” he said.
On the economics side, Statistics Canada says wholesale sales in January rose 2.4 per cent to $84.2-billion. Increases in the machinery, equipment and supplies subsector and the food, beverage and tobacco subsector led the growth. Economists had been looking for an increase of about 3 per cent for the month.
In the U.S., applications for jobless claims in the U.S. for the week ended March 11 fell by 20,000 to 192,000 from 212,000 the previous week, the U.S. Labor Department said.
Overseas, the pan-European STOXX 600 was up 0.16 per cent by afternoon, off early highs.
Britain’s FTSE 100 gained 0.39 per cent in morning trading. Germany’s DAX and France’s CAC 40 advanced 0.33 per cent and 0.77 per cent, respectively.
In Asia, Japan’s Nikkei closed down 0.80 per cent. Hong Kong’s Hang Seng lost 1.72 per cent.
Commodities
Crude prices saw early gains fade after the previous session’s rout as news of a financial lifeline for Credit Suisse helped ease jitters but market sentiment remained fragile.
The day range on Brent was US$73.59 to US$74.99 in the early premarket period. The range on West Texas Intermediate was US$67.52 to US$68.75. Both saw share losses on Wednesday. Since last Friday, Brent has lost about 10 per cent while WTI is down 11 per cent over that period.
“Bank stress weighed heavily on energy prices as it worsened the prospects of global growth – and that despite the set of good economic data from China,” Swissquote senior analyst Ipek Ozkardeskaya said.
“Saudi Arabia energy minister Prince Abdulaziz bin Salman said that OPEC+ will stick to production cuts agreed upon in October until the end of the year, but the attention is heavily on the demand side right now,” she noted.
Earlier this week, OPEC raised its China demand forecast for 2023 and a monthly report from the International Energy Agency on Wednesday flagged an expected boost to oil demand from resumed air travel and China’s economic reopening, Reuters reported.
However, supply issues continue to cause some concerns.
The U.S. Energy Information Administration said on Wednesday that U.S. crude oil stockpiles rose last week by 1.6 million barrels, more than analysts had been expecting.
Gold prices, meanwhile steadied. Spot gold ticked 0.1-per-cent lower to US$1,916.89 per ounce early Thursday morning, after jumping more than 1 per cent to US$1,937.28 on Wednesday. U.S. gold futures slid 0.5 per cent to US$1,922.00.
Currencies
The Canadian dollar was slightly firmer early Thursday while its U.S. counterpart pulled back somewhat against a basket of major currencies.
The day range on the loonie was 72.58 US cents to 72.88 US cents in the predawn period.
“Amid a dearth of domestic news and a central bank that is ostensibly on hold, the CAD has little incentive to move,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
“Volatile risk appetite remains a headwind for the CAD but valuation and a somewhat overbought USD may limit losses for now. More choppy range trade looks likely for spot.”
On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, was down 0.34 per cent at 104.29.
The euro was up 0.4 per cent at US$1.06225 having lost 1.4 per cent a day earlier, its biggest percentage fall in six months, according to figures from Reuters.
The U.S. dollar was last down 0.5 per cent against the yen at 132.77.
Britain’s pound was up 0.3 per cent at US$1.20890.
In bonds, the yield on the U.S. 10-year note was up slightly at 3.519 per cent ahead of the North American opening bell.
More company news
French oil major TotalEnergies is selling some of its European petrol stations to Canadian convenience store operator Alimentation Couche-Tard for US$3.3-billion as part of plans to turn them into food and services hubs, the companies said on Thursday. Couche-Tard has been seeking to expand in Europe since its bid for French grocer Carrefour failed in 2021 due to opposition from the French government. The companies said that under the deal the Canadian firm would buy all of TotalEnergies’ service stations in Germany and the Netherlands, as well as purchasing a 60% stake in the French company’s stations in Belgium and Luxembourg. -Reuters
Gold Fields and AngloGold Ashanti have agreed to merge their neighboring Tarkwa and Iduapriem mines in Ghana to create Africa’s biggest gold mine, the two companies said on Thursday. Their move shows how gold miners are looking to consolidate as companies seek to replace depleting reserves and contain cost pressures. Last month, U.S.-based Newmont Corp, the world’s top gold producer, bid $16.9 billion for Australia’s Newcrest Mining , triggering speculation of a new wave of mergers and acquisitions in the industry. -Reuters
Economic news
ECB Monetary Policy meeting
(8:30 a.m. ET) Canadian wholesale trade sales for January.
(8:30 a.m. ET) U.S. initial jobless claims for week of March.
(8:30 a.m. ET) U.S. housing starts for February.
(8:30 a.m. ET) U.S. building permits for February.
With Reuters and The Canadian Press
Terry Weber